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Oil prices not only affect the agricultural commodity directly but also indirectly through different channels. However, among these channels, the most important is the channel of exchange rate. The reason for putting emphasis on the mediating role of exchange rate between the oil prices and food prices nexus is that the oil‐importing counties like Pakistan pay their import bills in terms of foreign currency in the international market which as a result escalates the demand for foreign currency in oil‐importing countries. This study has analyzed the indirect influence of oil prices on food prices via exchange rate. We developed a Composite Index (CI) of the agricultural commodity prices including wheat, cotton, rice, gram, sugar cane, and maize. This index is generated by using Principal Component Analysis (PCA). Further, to construct our econometric model, we used mediation approach by applying Seemingly Unrelated Regression (SUR) model. The results indicate a positive relationship between exchange rate and prices of oil. We also found the same relationship between exchange rate and the food prices. In addition to this, we witnessed positive effects of prices of oil on the food prices in the presence of exchange rate. Our study confirms that exchange rate partially mediates between the nexus of oil prices and food prices. Our analysis explains the impact of oil price on agricultural commodity prices through the channel of exchange rate by using time series data of Pakistan. [ABSTRACT FROM AUTHOR]

This study explores the potential determinants of financial stress in the panel of emerging middle-income countries from 2000 to 2016. A variety of driving factors of financial stress classified into domestic, global, and institutional factors besides international linkages and regional dummies are taken. The study uses Principal Component Analysis to develop composite indices for the quality of institutions and financial stress. The authors apply various static and dynamic panel data techniques for robustness analysis. Findings underline the role of institutional quality in mitigating financial stress in these countries. Also, the authors conclude that deterioration in country characteristics and external factors stimulate financial stress in the selected countries. The study calls for strengthening the institutional setup that helps reduce political uncertainty, hence financial stress. It further suggests coordination in fiscal policy and mitigating recessionary trends to manage financial stress. It would have been insightful to evaluate the key drivers of financial stress in future through refined measures of political risk. [ABSTRACT FROM AUTHOR]

This paper aims to analyse the interactive role of fiscal and monetary policies in promoting inclusive growth. In this attempt, we use a panel data of 51 developing countries for the period 1995-2017 and employ state-of-the-art panel data estimation methods. The paper concludes that expansionary fiscal and monetary policies both affect economic inclusiveness in the developing region. However, it is observed that high expenditures in developing countries, which lead to debt crises, not only directly affect economic inclusiveness but also reduce the effectiveness of monetary policy. Therefore, the governments in these countries may consider cutting their spending. Thus, an increase in the money supply with a low to median level of government expenditure is a favourable policy option. [ABSTRACT FROM AUTHOR]

This study is to analyze the impact of increase in income tax on Pakistan economy's selected indicators like GDP, national income, imports, exports, balance of trade, private and public sector investment. The assessment utilizes latest SAM 2010-11, developed by Dorosh et al. (2015), for Pakistan's economy and uses a Computable General Equilibrium Model, consistent with Lofgren et al. (2002). To investigate the effect, two experiments of a 5%, and 10% increase in income tax are performed. The results reveal that increase in direct tax results in improvement with regards to all important macroeconomic indicators. However, rural households' categories express lesser improvement in comparison to urban households' groups. Our experiment suggests that increase in income tax should steadily be implemented to overcome the deficit in public budget. [ABSTRACT FROM AUTHOR]

This paper examines the dynamic relationships among inflation, output growth and their uncertainties for Pakistan and India for the period 1982-M4 to 2012-M12. We use various GARCH models to estimate the conditional variances that are used as proxies for the uncertainties of inflation and output growth. Finally, we use the bi-variate ARMA (p,q)-GARCH-M (1,1) models with diagonal BEKK specification to find the twelve causal relationships among inflation, output growth and their uncertainties. Our evidence supports the number of important conclusions. Firstly, we find that Friedman (1977) hypothesis, i.e., inflation leads to increase the inflation uncertainty is not supported in both Pakistan and India. Secondly, Cukierman-Meltzer (1986) hypothesis is accepted in Pakistan and Holland (1995) hypothesis is accepted in India. Thirdly, Black (1987) hypothesis is accepted in Pakistan and Deveraux (1989) hypothesis is accepted in India. We also find the strong relationship that higher output growth reduces the inflation in both India and Pakistan. We also conclude that the policy makers of both countries may take measures to reduce inflation rate because output growth is inversely related to inflation and the prevailing uncertainty in the economy. [ABSTRACT FROM AUTHOR]